Crains are popping up on the skyline of Plano again. And this time it's for construction of new office buildings instead of bridges.
There are currently 7 office buildings under construction in Plano totaling 959,591 square feet (SF). All of these buildings are in west Plano where we have seen rental rates rise dramatically in the last year. That is also the area where it is increasingly difficult to find large blocks of space available. Interestingly, it's also hard to find small space under 5,000 SF.
Three of the buildings are build-to-suits for large users - Encana Oil & Gas, Tyler Technologies, and Med Assets.
The other 4 buildings are being built on a spec basis meaning there was little or no pre-leasing when they started construction. These range from 26,229 SF to 157,800 SF. Three of these are multi-story office buildings with rental rates ranging from $21.00 net of all expenses to $30.00 full service plus electric. One building is a single-story office/flex property with rates quoted at $13.50 net of all expenses.
Construction has been announced for other property typces in Plano as well. An office/warehouse build-to-suit was recently announced for Eltek in far east Plano. And Granite Properties is planning to build a hotel in Granite Park at The Tollway and Highway 121 (Ram Rayburn Turnpike). It will flyer the Hilton flag.
So why is all this construction making news? It's because the Dallas Ft. Worth area has an overall vacancy rate of 16.1% as of the end of June according to Costar, a commercial real estate information and research service.
But that hides the nuances from one submarket to the next. Plano has a vacancy rate of only 9% citywide. In west Plano, it's only 8.1%. For class A properties, it's an even lower 6.6%.
So that's the real story. Companies have few options if they want to lease in the most desirable area of west Plano. And if they want to be there, they should be prepared to pay a higher rental rate than they could get in most other submarkets including east Plano, Frisco, and Addison.